UnitedHealth Group headquarters. Photo from UHG media kit.
The health care companies offering Medicare Advantage plans improperly denied services and payments at what might seem an alarming rate during a one-week test period in 2019, according to a government report released last week.
The companies — many of which are also major players in the Ohio Medicaid system — improperly denied payment 18% of the time and they incorrectly denied approval for certain medical procedures 13% of the time, the report by Inspector General for the U.S. Department of Health and Human Services said.
In response, an industry group representing insurance giants such as Aetna, UnitedHealth and Humana claimed making health care mistakes one-sixth or one-eighth of the time isn’t so bad.
The inspector general’s “report found that nearly nine in 10 prior-authorization coverage denials were consistent with Medicare coverage rules and more than eight in 10 denials for payment requests met Medicare billing rules,” the Better Medicare Alliance said in a statement. “Moreover, (the inspector general) found that Medicare Advantage plans approve ‘the vast majority of prior authorization requests and provider payment requests.'”
In conducting the test, the inspector general set out to determine whether the companies, some of which are among the nation’s biggest, were effectively denying coverage in violation of rules set down by the Centers for Medicare and Medicaid Services, or CMS.
In traditional Medicare, older Americans pay premiums to the government, which covers most of the cost of inpatient and outpatient services. But since the 1970s, private plans working with Medicare have been available. Now known as Medicare Advantage, the plans are paid a per-member, per-month rate by the government to coordinate patient care by creating networks of providers and paying them.
The idea initially was to give the private companies an incentive to achieve savings through things like negotiating with providers to lower their costs. But the Kaiser Family Foundation in 2019 reported that, “Over the past decades, Medicare payment policy for plans has shifted from one that produced savings to one that focused more on expanding access to private plans and providing extra benefits to Medicare private plan enrollees across the country.”
And beneficiaries are flooding into the Medicare Advantage plans. They’ve more than doubled, from 12 million in 2011 to 26 million in 2021, last week’s inspector general’s report said.
As they have, concerns about the companies’ practices have arisen. In 2017, the Government Accountability Office found that the Medicare Advantage plans overbilled the government by $16 billion a year earlier. And the watchdog group the Center for Public Integrity reported that federal officials have had persistent problems overseeing the massive insurers.
To spot check the companies, the Health and Human Services inspector general selected the week of June 1-7, 2019, and randomly selected 500 denials by the 15 largest Medicare Advantage providers.
The denials fell into two categories. One had to do with “prior authorizations” — services the plan has to sign off on ahead of time. In denying a prior authorization, the plan is saying it won’t cover a procedure.
The other 250 denials the inspector general randomly picked were refused payments to providers such as doctors.
Experts on health care coding as well as doctors reviewed the denials and determined that 13% of the denied prior authorizations were wrong.
“We identified two common causes of these denials,” the inspector general’s report said. “First, (Medicare Advantage companies) used clinical criteria that are not contained in Medicare coverage rules (e.g., requiring an x-ray before approving more advanced imaging), which led them to deny requests for services that our physician reviewers determined were medically necessary.”
The report recommends better federal guidance to avoid such problems in the future.
But there is still a question of whether the companies are denying services and payments to grow their profits. The U.S. Justice Department in 2017 joined a whistleblower suit against UnitedHealth claiming that its Medicare Advantage plan overbilled the government by $1 billion. The department abandoned most of its claims after the federal judge dismissed parts of the suit.
Some of the companies the inspector general spot-checked in the Medicare Advantage investigation have big business, and controversies, in Ohio.
Subsidiaries of CVS Health and UnitedHealth — the nation’s fourth and fifth-largest corporations — handled Medicaid pharmacy benefits in 2017. A state investigation the following year found they charged taxpayers $224 million more for drugs than they paid the pharmacies that dispensed them.
The state is also suing UnitedHealth’s drug middleman on claims that it defrauded the Bureau of Workers’ Compensation of $16 million.
And Centene, the eighth-largest Medicare Advantage provider, last year agreed to pay Ohio $88.3 million to settle fraud claims with the Ohio Department of Medicaid and more than $1 billion to settle similar claims with 21 other states.
Despite the lawsuits and controversies, the Medicaid department last year selected all three companies to receive contracts of more than $1 billion each.
Mary Beth Donahue, president and CEO of the Better Medicare Alliance, in a response to the inspectors general’s report said that her organization supports simplifying the prior-authorization process.
“While this study represents only a narrow sample of Medicare Advantage beneficiaries and polling data shows that less than half of Medicare Advantage beneficiaries have ever experienced a prior authorization themselves, Better Medicare Alliance has strongly supported efforts to streamline and simplify the prior authorization process for patients and providers,” she said.
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